Prospects for the packaging and paper segment should benefit from an increase in online retail sales during the lockdown. That needs to be set against the virtual shutdown of the high street, both here and abroad, which will stall demand for disposable instore packaging until normal commercial activity resumes.
For investors, it is reassuring that many products from the sector are routinely destined for less discretionary end markets, such as food and pharmaceuticals, and there has been a demonstrable shift in consumer habits towards delivery or food takeaway services. Meanwhile, supermarkets have struggled to re-stock produce as households tuck away storable foodstuffs, creating further demand for the packagers.
It remains to be seen whether the lockdown will accelerate the shift to online channels, although that seems highly likely. But even if it does not trigger a long-term change in consumer habits, conventional retailers may now look to reduce leasehold arrangements in favour of e-commerce.
Against this mixed backdrop, Smurfit Kappa (SKG) delivered sales volume growth in Europe and the Americas during the first three months of the year, although cash profits at €380m (£334m) were down by 10 per cent year on year. The underlying margin pulled back by a full percentage point, but both these metrics were set against strong comparators in the first quarter of 2019.
The packager joined several other FTSE 100 constituents by pulling its full-year dividend. The emphasis is on capital preservation, so capital expenditure has been trimmed from previous guidance of €615m, to be in the range of €500-€550m. It remains a cash-generative operation, boasting liquidity of over €1.5 billion, average debt maturities of over five years, and no bond maturity until 2024.
Buys | ||||||
Company | Director/PDMR | Date | No. of shares | Price (p) | Aggregate value (£) | Comments |
Capital & Counties Properties | Situl Jobanputra (cfo) | 17 Apr 20 | 12,500 | 88 | 11,000 | |
Capital & Counties Properties | Michelle McGrath | 17 Apr 20 | 20,000 | 88 | 17,600 | |
Ferguson | Thomas Schmitt | 15 Apr 20 | 13,500 | 5,147 | 69,497 | ADSs, converted from $ |
Ferguson | Geoff Drabble (ch) | 16 Apr 20 | 4,983 | 5,004 | 249,349 | |
Go-Ahead | Elodie Brian (cfo) | 21 Apr 20 | 2,500 | 1,205.42 | 30,135 | |
Intercede | Klaas van der Leest (ce) | 17 Apr 20 | 35,000 | 53.75 | 18,813 | Residual holding 53,904 shares |
Medica | Stephen Davies | 15 Apr 20 | 51,282 | 117 | 60,000 | |
Rentokil | Julie Southern | 16 Apr 20 | 4,891 | 406.82 | 19,898 | |
Robert Walters | Robert Walters (ce) | 21 Apr 20 | 25,685 | 389 | 99,915 | Residual holding 2,639,356 shares |
Smurfit Kappa | Anne Anderson | 16 Apr 20 | 3,668 | 2,249 | 82,493 | Converted from € |
Smurfit Kappa | Frits Beurskens | 17 Apr 20 | 2,800 | 2,327 | 65,156 | Converted from € |
SRT Marine Systems | Simon Tucker (ce) | 14 Apr 20 | 400,000 | 25 | 100,000 | Placing participation |
Sells | ||||||
Company | Director/PDMR | Date | No. of shares | Price (p) | Aggregate value (£) | Comments |
Genus | Daniel Hartley (co sec) | 17 Apr 20 | 750 | 3,610 | 27,075 |